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Consumer sentiment came in better than expected in February, reaching the highest level since August, but still remains down about 20% from last year’s highs and near historically low levels as fears about inflation and the labor market weigh on Americans.
The University of Michigan’s Index of Consumer Sentiment for February came in at 57.3, up 1.6 points from January but down 11.4% from last year’s level of 64.7. This rise beat forecasts, with data from Bloomberg showing economists expected this report to come in lower than January at 55.
“While sentiment is currently the highest since August 2025, recent monthly increases have been small — well under the margin of error — and the overall level of sentiment remains very low from a historical perspective. Concerns about the erosion of personal finances from high prices and elevated risk of job loss continue to be widespread,” University of Michigan surveys of consumers director Joanne Hsu said in the release.
On Thursday, US jobless claims came in higher than expected, while Challenger, Gray & Christmas said job cuts in December were the lowest since 2023. Official jobs data from the BLS is set to come out on Feb. 11 after the latest partial government shutdown delayed the release, which had been set for Friday morning.
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Inflation expectations showed further signs of improvement, with year-ahead inflation forecasts falling to 3.5% from 4%. That’s the lowest since January 2025, but still far higher than the 2.3%-3% range seen in the two years prior to the pandemic. The BLS is set to release its latest inflation report next Friday, Feb. 13.
Friday’s reading from the University of Michigan also showed a divergence based on exposure to the stock market, though the report noted responses to this survey were collected prior to the onset of the software-led tech sell-off that started earlier this week.
“Sentiment surged for consumers with the largest stock portfolios, while it stagnated and remained at dismal levels for consumers without stock holdings,” Hsu said.
“On net, modest increases in current personal finances and buying conditions for durables were offset by a small decline in long-run business conditions,” Hsu added.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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